Ukraine troubles hit NZ firms

RUSSIAN SEED UNSOWN? Feilding manufacturer Baker No-Tillage has had export negotiations with Russia disrupted by the crisis in Ukraine. Pictured are general manager Bill Ritchie, and chief executive John Baker.

As the prospect of violent upheaval in Ukraine grows, Manawatu companies trying to gain a footing in Russia have been caught in the verbal crossfire.

New Zealand has joined the rest of the world in condemning Russia's squeeze on Crimea, and trade talks between the two countries have been suspended.

Trade Minister Tim Groser, who had been finalising the trade agreement, was pulled out of Moscow on Monday night by Prime Minister John Key.

Key said the talks between New Zealand and Russia would be suspended for a while, particularly if tensions in Ukraine escalated.

Feilding seed-sowing machinery exporter Baker No-Tillage has been negotiating a business deal in Russia that is now up in the air.

"We were in an unusual position in that our negotiator and agent on the ground was from Ukraine," founder John Baker said.

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"We've advised the agent that we would rather he dealt with the more important things happening around him, and that we would deal directly with it. It's left us in a pretty uncertain position. We're not even sure if the negotiation will continue or if we will even be allowed to continue the negotiation."

Baker No-Tillage had been positioned in the area for a while, but was unable to gain a footing after the financial crash hit eastern Europe particularly hard in 2008 and 2009, Dr Baker said.

"We suffered badly from that and now we were starting to get on an even keel and this happens. It's a tricky situation to be in.

"At the end of the day we are just waiting to hear what the Government's official position is. If there's a trade embargo with Russia, which is the next step for them to take, that is going to hurt us."

Baker said exports to Russia were a small part of the business but had the potential to be "huge".

"Our technology suits their country very well."

Palmerston North businesses exporting to Russia are also watching the situation in Ukraine closely.

Integration Technologies managing director Brendon Deere said it was too early to know what New Zealand's suspension of free trade talks would mean for the company.

The Palmerston North petrol pump automation technology specialists have developed a sophisticated customer loyalty system for Shell Russia and Mr Deere last year visited St Petersburg to see it in action.

"At this stage we don't know what it will all mean. We're hoping for a diplomatic solution."

Kelvin Grove business Reese Engineering was uncertain as to how much it would be affected.

The company exports seeding equipment to Russia and recently had a representative in Moscow at a New Zealand Trade and Enterprise-organised AgroFarm trade fair.

There was likely to be less opportunity for the company to be visible in Russia without a free trade agreement (FTA) on the table, director Rob Baan said.

"It will take some of the focus away from New Zealand. We've had some good articles as a result of the possibility of the FTA and those will disappear.

"Whether NZTE will continue to organise things like the [AgroFarm] in Russia is another thing to think about."

The company would be taking a long term view if faced with possible losses, Baan said.

"It's definitely still a place we want to be. It's a country that needs to invest a lot of money in its primary sector because they're not producing enough food. It's a case of time will tell."

An NZTE spokeswoman said they continued to work with 60 companies in New Zealand with an active interest in Russia, mainly in agri-business.

The Russian market made up 0.5 per cent of New Zealand's total exports.

There were no further trade events or missions to Russia planned this year, even before the Ukraine conflict broke out, she said.